While most of us understand that a secured home loan is a way of raising money against the value of our property, what many home owners do not realise is just how many different uses such a facility can have.
1. Home Improvements
The most common use of a secured home loan is to add value to the house itself. This is a highly effective way of maximising the capital within your biggest asset, and creating greater wealth for the future. As long as the improvements you are carrying out add more value than you are paying for the loan, the real cost of the loan will actually be negative, thereby making you money in the long term.
2. Debt Consolidation
It is often the case that taking out one single loan to pay off a number of little loans can cut a significant chunk out of the cost of your overall repayments and administration charges. Yet far too few people in financial difficulty understand that such a process is possible.
And when such a loan is secured on the value of your home, this could mean the interest charged is considerably lower than the rates that you have been previously quoted.
Security, in the form of the property, can also make it possible to extend the term of the borrowing, thereby reducing your monthly outgoings. This can be particularly useful if you are going through a rough time, and need to reduce your monthly bills in the short term.
Having one single loan can be far easier to manage than a number of smaller loans, making the overall organisation of your debt more straightforward.
3. Further Investment
Taking value out of your home, and using it to make an investment outside the property, is also possible with a secured home loan. This is particularly useful for someone who wishes to start up their own small business, or invest in an existing organisation. Such an investment can create long term employment opportunities for you and your family, whilst avoiding the need to burden any fledgling company with debt.
A secured loan can provide access to short term funding when there are liquidity or cash flow issues within an organisation, or it can be used to buy a large order of stock to take advantage of bulk discounts or special offers, that will enhance the profitability of the business in the long run.
4. Major Purchases
Many people do not realise that a secured home loan can be used to buy both essential and luxury products that are not associated with either the home or a business. Even if you want to go on a once in a lifetime luxury holiday, it is possible to use the value in your house to secure the funding required to help you fulfil your dream.
Even if you can’t release the value in your home by increasing your mortgage, a secured home loan makes it possible to enjoy the benefit of the asset you have in your home, in ways that you may never even have known were possible.
By Harry Price
Harry Price is a self confessed fitness freak dog lover, who lives on the south coast with his 3 cocker spaniels. They make the perfect running buddies for his marathon training.